We were a low-cost alternative to MCI and Sprint

Steve Peace turned on us

I didn’t screw up, or at least nobody noticed if I did, because everyone else was equally at sea.
  • I didn’t screw up, or at least nobody noticed if I did, because everyone else was equally at sea.
  • Jupiterimages/liquidlibrary/getty images plus

There came a time in the early 1990s when I realized I needed to find a serious job. Or, failing that, a couple of really bad jobs.

I had part-time employment at UCSD, but that was ending. So I went off on a random walk that took me into an area of technology that no longer exists and is scarcely remembered: telecom switching and reselling. Briefly I was an international telecommunications executive, with offices in London and Paris. Then everything crashed.

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But to begin at the beginning: at UCSD I helped manage something called the “job listserv.” This was a mailing list showing employment opportunities at and around the university. You’d dial us up on your 9600bps modem — a modem was still something of a novelty in those days — and down would come a sheaf of job descriptions, beep-boop-beep.

Most of the positions were clerical and part-time, rather like mine (“Must have familiarity with e-mail”); laughable and contemptible in the best of times, though maybe not at this particular moment. A few were “real” quasi-professional jobs, either at the university or in a neighboring firm in Golden Triangle or the mesas. Any job that paid more than about $25,000 a year elicited hundreds of responses inlcuding obsequious cover-letters and gilt-edged CVs.

It was so sad. I felt so sorry for these people I sometimes forgot I was about to be unemployed myself.

I spent my last couple of weeks at the listserv applying to every remote possibility that showed up on our job list. I didn’t keep track of my applications, any more than I crossed my fingers over the want ads I kept answering in the Union-Tribune. Marketing Assistant, Operations Trainee, Whatever Technologist. Or: Night-Shift Graphic Designer at Kinko’s. Now that I do remember, because it was up around Solana Beach, paid a princely $14 per hour, and 70 people had already applied, or so they told me.

Every employee in our shop was to receive...a bread maker! Oh boy!

Every employee in our shop was to receive...a bread maker! Oh boy!

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When it seemed nobody wanted me, I looked at the calendar and saw it was October, about time to start applying for the “seasonal help” jobs at the local mall. I didn’t want to drive anywhere, so I was pretty much limited to University Towne Center, a sprawling shopping complex at La Jolla Village Drive and Genesee Avenue, and thus only a 10- or 12-minute walk from my apartment.

UTC was thought to be fairly upscale in those days because A) it pretended to be in La Jolla, B) it was anchored by a big Nordstrom, and C) it featured such choice eateries as Carlos Murphy’s and Tony Roma’s (“A Place for Ribs”). The bar for “upscale mall” has been raised a bit since those days.

Along with these big-footprint establishments were dozens of costume-jewelry shops, Thomas Kinkade galleries, golf-souvenir emporia, a Warner Bros. Studio Store that sold cartoon memorabilia and animation cels; and so forth. Surely one of these places could take me on? They paid barely over minimum wage, but if I worked 50, 60 hours a week I could get by for a few months, and I wouldn’t have to move back to my aunt’s in Newport Beach.Besides which (I told myself), somebody was bound to see how smart I was, and they’d make me assistant manager, maybe by Thanksgiving!

So I put on an act of being a half-witted and overeager job applicant. Clearly I overdid it, because only one shop took the bait. That was Williams-Sonoma, a tiny storefront hidden downstairs in one of the less desirable canyons of the mall. Near the dumpsters, in fact, down past Tony Roma’s. Today everyone knows Williams-Sonoma as a posh cookery chain where you can pay $300 for a coffee-maker. Back then, it was just breaking out of the catalog business, a junior partner to Pottery Barn. It didn’t rate a location on the main level of University Towne Center.

I did not become assistant manager. No, my work mainly consisted of unpacking stock as it arrived — glassware, pasta bowls, spatulas, Kitchen Aid mixers, canisters of Golden Malted waffle mix bearing a strange little bow-tied boy on the label, and five times more dishcloths and aprons than we could possibly sell, which we stuffed into every available crevice of the stockroom shelves.

I worked a plastic gun that affixed adhesive “SKU labels” to every double-old-fashioned glass and ironstone chili bowl. I restocked the shelves out front and put the trash out. And when the weekends got really busy, I’d be a greeter (“Welcome to Williams-Sonoma!”) and do salesgirl work on the floor. I didn’t want to do cashiering, which was fine because that job was much sought-after by all the chirrupy teenage girls. For some reason, they thought working the cash register was high-status.

The pay was scandalously low, but you weren’t supposed to care, because you got a 20-percent discount on everything in the store. And it was, like, just a seasonal job, you know. Years later, I heard that San Diego companies had a reputation for underpaying employees because the they were being paid in “sunshine dollars,” a nice way of saying it’s a buyer’s market for overqualified employees.

It was all very imaginative, but it overshot the capabilities of standard PC processors of that era.

It was all very imaginative, but it overshot the capabilities of standard PC processors of that era.

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My luck took a turn: a temp agency got me a job pasting up Yellow Pages ads for $10 an hour. I could have quit the Williams-Sonoma gig, but decided to stick with it on nights and weekends. I ended up working 60-70 hours a week and breaking my health. On Christmas Eve, I developed a fever of 104 and was completely laid up for days with flu and sinusitis.

More pathetic good luck: our UTC Williams-Sonoma won a sales prize. Yes sir, our shop had beaten out every other Williams-Sonoma in Southern California, in terms of revenue-per-square-foot for the Holiday Season. And every employee in our shop was to receive... a bread maker! Oh boy! The number one culinary fad of the early 90s!

The reason we came in first was simple. We were the smallest Williams-Sonoma in SoCal. We had a sixth of the floor space they had up at South Coast Plaza. Why we had such a tiny space is a puzzlement. My guess is that at the Williams-Sonoma HQ, they imagined their “La Jolla” door was in a quaint seaside village, surrounded by postcard shops and crafts-jewelry booths. Up in San Francisco, they don’t think there are any large conurbations south of Los Angeles. Many years later they got clued in, and W-S now has a much grander space, one that isn’t near the dumpsters.

Little Chuck Williams himself came by after Christmas to check us out and congratulate us. Because a lot of us hard-working employees already had bread machines, it was decided that we could alternatively take out our gift in other W-S merchandise. I chose a set of All-Clad cookware and some garlic roasters. Somebody told me that eating a lot of roast elephant garlic would be good for my sinusitis.

And then, suddenly and unexpectedly, I got a real job nearby, one with a decent paycheck. I kept working for Williams-Sonoma anyway on nights and weekends. Because I’d made friends there, and they were doing inventory in January, and they needed me. But mainly, the work was so mindless, I found it very therapeutic, like playing golf. You could think deep thoughts about the French Revolution and Napoleon while you broke down shipping boxes, or stuck SKU labels on hand-painted ceramic French wine carafes shaped like chickens.

The new job, across the footbridge over La Jolla Village Drive, was located in a building that said Smith Barney. I assume Smith Barney was a major tenant. I, however, was not going to work for Smith Barney. I was going to work for a strange outfit on the ground floor named Titanic Telecoms. That wasn’t its actual name, although that was what some of my coworkers called it when I was working in London a couple of years later. We went through a succession of five or six names as we changed our branding and got swallowed up in mergers.

Titanic was a low-cost alternative long-distance company (such as MCI and Sprint in those days), although it fancied itself a high-tech firm doing important R&D. There were a number of small telecom companies like this in the San Diego area. Most went under or merged with a major player by decade’s end, or else they moved into the mobile or internet business. Titanic eventually got gobbled up by a company that merged with MCI WorldCom, which itself finally crashed in the biggest bankruptcy in American history (2002). Low-cost long-distance was an industry with a very short half-life: the companies all tried to undersell each other, couldn’t make a profit, and then everyone had a mobile phone, and then mobile service got cheaper and cheaper.

The reason I ended up at Titanic is that I had responded to a Union-Tribune ad (or maybe a listserv posting) seeking a “marketing assistant.” But Titanic Telecoms really wanted me as an operations manager. The two people I interviewed with told me I had “a solid technical background,” because I’d had “that computer job” at UCSD. I had a queasy feeling that I was getting into the most colossal screw-up of my life. Only I couldn’t back out, because the pay was so good.

When I first went in for the interviews, I was still dizzy from my fever. Floating in and out of my daze, I thought, “I’m not making sense, this is the job interview from hell.” I was babbling. And then, coup de grace, I attempted some gallows humor about how I was working for minimum wage over at Williams-Sonoma, where we had just won a sales competition... and everyone got a bread machine... but I needed to get a real job soon, or I was going to have to go back to Newport Beach and sleep on my aunt’s folding couch.

My interviewer’s face lit up when I said “Newport Beach” It was like the Groucho Marx duck coming down. I’d said the magic woid.

This made no sense to me then, but very little did. I will explain all later.

I settled in quickly at Titanic Telecoms. I didn’t screw up, or at least nobody noticed if I did, because everyone else was equally at sea. It turned out almost everybody got hired in the same crazy-ass way I did. Lulu Kelly, our HR director, had her secretary open the mail as it came in, and toss the resumes into a big slush pile. Then she just ignored them until the day came when she had to hire someone. Then she’d rifle through the pile and pick out a likely prospect.

And so, a guy who applied for a job as an administrative assistant got hired instead as head of marketing. And the middle-aged CPA who applied for the position as accounts-receivable bookkeeper, well, they made him director of the call center instead.

For a long time, I put this all down to the inept, improvisatory way everything seemed to happen at Titanic Telecoms. It was only after I’d been there a year that I realized what was going on. As per instructions from the company head, Lulu only advertised for low-level and clerical positions. That way she didn’t have people coming in, waving their lunker-school MBAs and demanding $100,000 to be a middle-management drone. Lulu would place ads for cruddy jobs that looked as if they paid $20-25k, then she’d cherry-pick you for a more substantive role and offer you $40k.

You’d think you’d really lucked out, and you’d be a hard-working, loyal employee for months on end! It was a brilliant hiring strategy.

The downside was, some people got their noses out of joint when new hires immediately got moved up the totem pole. In some places, this might cause a morale problem, but we got around it. We just let the old-timers stew and sulk for a couple weeks, then we fired ’em.

We hired at whim, and fired just as quickly. Molly, the vice president of operations and technically my boss, often stopped by in the morning and dropped ex-employees’ beepers and parking-garage passes on my desk. Sometimes, she gave a brief explanation, very la-di-da: So-and-so was fired because he gave himself admin rights on the database. Or: J.J. told me to fire all the AS/400 programmers, so I did.

Nowadays you might say Hahaha, serves you right for using a payphone. And you’d be right.

Nowadays you might say Hahaha, serves you right for using a payphone. And you’d be right.

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This was the way Molly’s brother J.J. liked to do business, and nobody dared countermand him. J.J. Hughes was an intense fellow who lived mostly on Diet Pepsi. What he liked to do best of all was to fire a few PC and telecom-switch techs every week, and then maybe hire them back the following day. What he liked to do second best was sit in his glass-fronted office in that Smith Barney building, interview young engineers (some of them filched from UCSD), and talk for hours about the arcana of telephony: DS3s, and T1s, and Signaling System Seven.

J.J. dreamt of making Titanic into an R&D leader, a great Skunkworks of the communications industry. He wanted to invent his own digital telephone switch, instead of leasing those million-dollar Siemens DCO switches that were always the biggest expense on the company financials. This dream would eventually lead the company down a dark and winding path of ill-conceived innovation.

Dr. Sooch

One day J.J. decided there were too many techs for him to handle directly, and that the company really needed a chief information officer. So he told the executive vice president, who told me, and I called my friends at Robert Half, who came up with a cheerful, garrulous East Indian, then working in Omaha.

“Dr. Sooch,” as he liked to be called, had a PhD in something software-related. He also claimed to have an MBA from the world-famous Harvard Business School. However, this was in a field in which the Harvard B-School does not grant MBAs. Apparently, he had one of those loosely affiliated “executive program” MBAs, but claimed it was a Harvard MBA anyway.

Sooch and I became fast friends. We’d go out to Mongolian grill in the evening, and he’d tell me about how he grew up in London and went to Harrow, where he was in the same form as Rod Stewart. Sooch hadn’t a trace of a British accent, but perhaps he had shed it, like a bad tooth.

And Sooch told me about when he was “at Harvard,” where he was a grand friend of Bill Gates. This was supposedly during Bill’s only year at Harvard College. Sooch related how he and Bill would stay in their dorms during Thanksgiving holiday weekend, and live on ramen noodles.

The ramen story is a good one; a similar tale appears in the brilliant TV series Breaking Bad. Obviously, it reflects a certain university reality of the 1970s and 80s. Problem here is, Bill Gates dropped out of Harvard College fifteen years before Sooch took his spurious Harvard MBA degree.

Dr. Sooch was our first CIO, and he took his job very seriously, calling meetings every day, issuing direction to all the ops and tech people (including Molly and me), the programmers, and the fat, grouchy wirepullers who serviced the LANs and PCs. However, these PC techs were tough guys — repurposed construction workers — and they were used to reporting directly to J.J., the Big Boss. They weren’t taking any guff from this dizzy little Hindustani. So the bruisers got together at Molly’s house in Del Mar one weekend and wrote up a manifesto, demanding that Dr. Sooch be sacked.

Come Monday, Sooch saw the memo and went to J.J. “Can I fire them?” he asked.

And J.J. said, “Sure, it’s your call.”

So Dr. Sooch fired the wirepullers. A week or two later, J.J. fired Dr. Sooch.

It was a really convenient way to clean house. I don’t think J.J. ever brought in another CIO.

Later on, I was working for J.J.’s father in London, and I happened to mention Sooch. The old guy knew all about the Sooch episode in San Diego. He shook his head in disgust. “I warned him, I warned him,” meaning J.J, “you have to steer clear of these Indian engineers with their fancy degrees who talk a good game but can’t do a damn thing.”

In the event, however, Dr. Sooch took his revenge by walking off with a $10,000 IBM ThinkPad laptop. I was tasked with phoning him up and making him give it back. Sooch smoothly assured me he didn’t have it. I couldn’t blame him.

Sooch and I stayed in touch for years after this, in London (where he always seemed to be passing through) and Seattle (where he kept promising to get me an interview with Bill Gates) and Los Angeles (where we roomed in a bad airport hotel). Once, during a London sejour, he promised to take me and friend out to a fine gourmet dinner. When the day arrived, our white-tablecloth evening somehow turned into a quickie lunch at a Burger King in Oxford Street, with Sooch dressed in the tracksuit he invariably wore on his travels.

Land pirates

One of my many slowly-dawning realizations about Titanic Telecoms was that nearly every significant managerial post was held by a member of J.J.’s family. His sister Molly was supposedly vice president of operations, while Molly’s husband headed sales in something called “operator services.” J.J.’s father ran the Miami office, until the company went international and the old man moved to London.

And then there was J.J.’s mother, a wraithlike soul whose badge bore the title of “facilities manager.” We had a real, full-time facilities manager by this point, and it wasn’t she, but we were free and easy with titles at Titanic Telecoms. So far as I could tell, this lady’s sinecure consisted of walking through our offices and making sure no one had pinned up or taped things to their cubicle walls. I first encountered her during one of our frequent office moves, when I had temporarily taken up residence in a vacant, unused cubicle. The old lady came by and wagged her finger at a Dilbert cartoon some previous tenant had taped up many months before. “You’ll have to take that down,” she said. “J.J. doesn’t like that.” Did she mean that particular Dilbert episode, I wondered, or the fact that someone had used Scotch tape, or what? I gather this was an activity J.J. had dreamt up to keep his mother busy.

My favorites in the extended J.J. clan were the Scottish in-laws. J.J. was married to Fiona Robertson, daughter of two hard-bitten Scots from the Firth of Forth. Fiona, mother of two, was a blonde hottie who did a daytime fitness show on the local CBS affiliate. You could tell her parents had been striking numbers themselves, back in the day; some good genes there. Fiona’s mother Rita always dressed to the nines. She officially held the post of assistant human resources director. She was the one who gave you paperwork when you were hired, and who then photocopied your credentials and made you a company ID. If you were a person of some import, she’d pass you over to me to get a garage pass and a beeper.

One day, J.J. became obsessed with making every employee wear an employee ID. He ordered his mother-in-law to enforce this, threatening automatic termination. This had less to do with J.J.’s obsessive-compulsion than with the fact that we were hiring and firing so many Mexican and Vietnamese call-center people, we no longer knew most of our employees. So everybody had to wear a badge. Rita would creep up on you and bawl you out if you didn’t have your badge on.

I rebelled, said it was nonsense. Rita would cut me slack because I’d stand out on the terrace and smoke with her, and we’d trade company gossip. And she’d tell me about Edinburgh in the 1950s. She knew Sean Connery. Everybody knew Sean Connery — or Tom Connery, as he was then. “He was a show-off,” Rita would say, with a sneer. “Show-off didn’t mean the same thing it means here,” she explained, mystifyingly.

Rita was a really furious cigarette smoker, like someone circa 1958: articulated forearm jerking cig-to-mouth like a windup toy. Puff-puff-puff. I wasn’t much of a smoker, but I saw the advantage of smoking breaks and company scuttlebutt. I’d bring Rita a carton of full-strength Silk Cuts from the Duty Free when I was flying back and forth from Heathrow.

Then there was J.J.’s father-in-law, Rita’s husband Bob Robertson. With a couple of their kids, Bob ran the “zero-plus” division of the company, which installed payphones in motel lobbies and bars. Bob’s payphones were just like traditional payphones, only they were on our network, and they charged you a heavy fee if you made a long-distance or operator-assisted call.

Nowadays, you might say Hahaha, serves you right for using a payphone. And you’d be right. But in 1992, people still thought you shouldn’t be ripping people off with payphones. Most Americans grew up thinking of payphones as a solid, honest sideline of Ma Bell.

The other part of Bob’s business was signing up small-time motels to use our service. As with the payphones, you got charged fabulous amounts if you dared make a long-distance call from your room at the Gasping Gulch Motor Court. This was a sweet deal for motel owners, because they got half the money. A business model like this wouldn’t work at a serious hotel chain such as Hilton or Radisson, but people staying at little ma-and-pa hostelries in the desert weren’t business travelers auditing their hotel folios. They’d seldom complain about a $30 phone call to Palm Springs, and they probably weren’t coming back to Gasping Gulch anyway.

I thought of the Hughes-Robertson clan as land pirates, a throwback to ages ago, a family aligned with the world. “Arrgh, belay ye, varmint. Take yer last fifty hires and keelhaul ’em overr La Jolla Village Drive!”

Bob Z

Outside J.J.’s extended family, there was an outer circle of loyal associates, people who had been working for him for years, since back in the late 80s when the company was a precious-metals telemarketer in Newport Beach. When I mentioned I had an aunt in Newport Beach, people in the company got the idea I was an old associate of the J.J. Hughes clan. But, as I have suggested, this mystery took me a while to unravel.

There was an old Jewish office-furniture dealer up in Newport Beach named Bernie, who was dunning us for some painting work and old chairs. This was around the time I joined the company. I took the calls.

“Tell him to go to hell,” said J.J. “We’re not going to do any more business with Bernie Cantor!”

So we were stiffing Bernie? We didn’t, really. Five months later, we expanded into our new space and needed about a hundred desks and cubicles. And our vendor was the very same Bernie, and he was giving us a sweet deal to make up for the fact that he’d given us a hard time, or because he was an old vendor friend from Newport Beach.

Bernie came with his son that big construction weekend when we set up the new call center, and they even helped unload their furniture vans. But there was a little problem with Bernie and Son’s sweet deal: they brought us a lot more grey-melamine desks than we needed or could store. They didn’t want to take them back. This overload was part of the Sweet Deal, I guess.

But it was a problem for me. I was stuck with a dozen or more desks and chairs, with no obvious place to put them. So I had the moving men double-stack them in nearby offices.

Come Monday morning, I had a very incensed new hire in the form of Mr. Bob Z, a senior manager who’d just moved from Florida. Bob had been looking forward to his brand new office in our brand new building. Instead he got a rat-maze with his desk at the rear.

“WTF is this? What am I here, the quartermaster sergeant?” he said, waving his arms, when I dropped by.

I started to laugh and couldn’t stop. He did look totally ridiculous gesticulating back there, with the grey melamine desks closing in on either side.

Bob Z was very funny when being serious and self-important, less so when he tried comedy. After work one evening, I was coming back to the office in my running gear. I’d been preparing for a 10k, and wasn’t going to change back into dress and heels before going home. And then appeared Bob Z, giving me the once-over and making smart-alecky remarks: “What, is this the new office wear?” A year or two later, he’d probably be one of those jerks calling, “Run, Forrest, Run!”

Anyway, I always seemed to run into Bob Z there, either on a footbridge or on the winding concrete path that connected our buildings to the Rusty Pelican and other buildings along La Jolla Village Drive. Sometimes, Bob would tell me his sorrows. He’d moved to a 5000 square-foot rental house in Rancho Santa Fe where he was paying $1200 per month, but somehow his 9-year-old kid didn’t have any neighbors to play with.

Now this was funny, again. Apparently, Bob hadn’t done much reconnaissance before moving from Tampa Bay to Rancho Santa Fe. But in the end, it didn’t matter. He wasn’t going to be in Rancho Santa Fe, or with the company, much longer.

A few days later I found an internal e-mail printout by the laser printer. It was J.J.’s brother-in-law nastily complaining about Bob.

By the time I found this out, Bob was canned. I felt bad about Bob; he was never going to fit in. He wasn’t part of the J.J. clan, and he wasn’t from Newport Beach.


For decades, J.J.’s family had run a small manufacturing business making high-voltage power transformers for military use. I never knew quite what that description meant, but I figured it was some kind of defense subcontracting.

J.J. worked for the family firm in his teens and early 20s, then had an entrepreneurial sideline as a distributor of illegal substances. It was no more than a few kilos of cocaine in the space of maybe a year. But cops had him under surveillance, and eventually he went to state prison. Afterwards, J.J. knew he was going to have to stay in the background of any company he built. This made him secretive, and eager to surround himself with unblemished front-men who could take meetings and sign the financials. If you looked at our company reports, you’d see Mr. Blah-Blah was President of Titanic Telecoms, and Mr. Whoosis was Executive Vice President. Then, way down the list of officers you’d find J.J. Hughes, with some minor, inconsequential-sounding title. As the largest shareholder, he had to be somewhere on the officers’ page, though he might have preferred to forgo the honor.

J.J.’s conviction was one of those things you gradually found oug about if you survived your first few weeks at the company. Few people outside the family knew the details, and even people who had been there for years thought it was no more than an arrest for selling a couple ounces of marijuana. In reality, he and his brother-in-law had run quite an impressive operation. However, I didn’t learn the inside scoop till I had been at Titanic for a year-and-a-half, and we found ourselves with a likely merger partner who was doing due diligence.

Because however rumbustious and eccentric the company looked on the inside, it was expanding far and fast, and had caught some favorable notice in the industry. Company revenues were doubling every six months, although we’d taken on enormous debts, beginning with our leases on three million-dollar Siemens switches set up in North America, as well as new offices and facilities opening up in Europe and Australia.

Presumably, J.J.’s hope was to go public, quadruple the size of the company, and then sell it before the bottom fell out of the telecom-reseller market. But an IPO meant SEC filings and top-level auditors (ours were Ernst & Young), and that meant getting a Chief Financial Officer with an impeccable track record to sign the financials.

And so a sterling CFO arrived, in the form of a tall young financial accountant who had worked on the Dell Computer public offering when he was with Arthur Andersen. He looked a lot like the film actor Joel McCrea, circa 1940, if Joel McCrea were ever to portray a bespectacled financial executive.

Our Joel was an ideal front-man for negotiating bridge capital or an acquisition partner. He could fly off to Wall Street or take an early morning meeting in downtown L.A., and the other side wouldn’t have a clue what Titanic Telecoms was really like. Calm, patient, and persevering, he was perfectly willing to stand in queue outside J.J.’s office when J.J. wanted to talk to some techs for a while. Techs outranked chief financial officers in J.J.’s world.

(You could cool your heels for hours outside J.J.’s office. We had a code phrase for this: “I’m going to Toon Town.” Toon Town was a newish attraction at Disneyland, based on the Who Killed Roger Rabbit? cartoon. The wait lines were notoriously long. Joel and his wife and kids knew it well.)

When Joel had been at Titanic for a year and a half, he found a very serious acquisition partner, a young telephone-and-internet company looking to expand its customer base. The company needed full disclosure about our founders and officers. And shortly afterwards, our in-house lawyer came by and dropped a fat legal brief on Joel’s office chair. It described J.J.’s 1982 cocaine bust and conviction, and made for good reading.

In the early 80’s, one of J.J.’s relatives had a little jewelry-and-beachwear shop in Newport Beach. Out front, there were some earrings and sundresses, and in back, a cocaine dealership that was open for business for an hour or so each evening. Cops observed that the clientele was all female in the daytime, and male after-hours. They watched the shop for six months, then J.J.’s brother-in-law, and finally J.J.

The two young men were good businessmen, keeping careful books, and hiding their payment ledgers in the filter of a vacuum cleaner in the back of the store. Somehow, though, they failed to notice they were under surveillance. I’m not sure what happened to his brother-in-law, but J.J. went to state prison for a few years.

By the mid-90s, this conviction was more than a decade old. But I gather our potential merger partners’ interest evaporated when they got this news. They were a young company too, you see. There are some folks you might love to have as golf friends, but you don’t want to list them as officers or owners of a publicly traded company.

And it was right about this time that our finance star, the simon-pure Joel McCrea of San Antonio and Rancho Santa Fe, started to look around for another enterprise where he could hang his hat. He quickly found one in a new mobile-communications firm.


By this point I’d moved to London for fun and advancement, but came back every few months to San Diego. In the back of my mind was the thought I might need to bail out and get a job with Joel’s mobile-phone firm.

Storm clouds were gathering for Titanic Telecoms in 1995 and ’96. Some people in the news media had decided that these low-cost long-distance companies were a menace, and needed to be put out of business. They were cheating customers, supposedly switching them through fake authorizations. The noise began with complaints about small-time telecom resellers in Florida and Texas, and eventually found its way to California.

On a local TV news channel in those days, there was a large-bodied blonde, whom I’d frequently see around lunchtime at Samson’s Delicatessen (a now-departed establishment in Golden Triangle). Years later, she ran for the San Diego city council, but in those days she gave herself the on-air handle of “Consumer Watchdog.”

She came up with an exposé that specifically targeted Titanic, claiming the company was major perpetrator of the practice of “slamming.” Slamming meant that the company would sign up customers through dubious means, and when the customers tried to opt out, the company would pull them back in — i.e., slam ‘em back.

As a practical matter, such activity was usually not possible. When you signed a new customer to your long-distance service, you had to get a letter of authorization; either on paper, or on a telephone authorization that we recorded and stored on cassettes that we kept on premises. This detail however was too mind-numbingly technical for our Consumer Watchdog’s news segments. So instead she went for the low-hanging fruit: the “human-interest” side to the story. In this spin, Titanic was supposedly preying upon poor Mexican and Vietnamese immigrants, by having them telemarketed by our Mexican and Vietnamese employees. And as a final zinger, she managed to work in J.J.’s drug conviction, back when he was 23 years old.

There is an irony here, in that beyond several daily cans of Diet Pepsi and an occasional cigarette in the evening — out on the patio behind that Smith Barney building on La Jolla Village Drive — J.J. was a most abstemious CEO. If he had a troublesome vice, it was in his wild technical imagination.

“I had a vision”

J.J. sent around an e-mail one day, and it was positively mystical. As I recall, it went something like: “I had a vision last night, it was so obvious yet so profound. Why are we bothering with these telecom switches when all they are, are computers? Yes! We have the software, let’s just feed it into a rack of PCs!”

And so began the PC switch project. Stacks and racks of what were basically PCs, configured as servers with telephone switching software. And to perfect the system, we hired electrical and telephony engineers who could adapt standard switching software to work on our rack PCs.

It was all very imaginative, but it overshot the capabilities of standard PC processors of that era. The fundamental problem was scalability, meaning: this might work with a dozen users, or even a hundred; but after a thousand or so the system was going to be overloaded. You could maximize throughput of calls by using voice-compression technology, but then you’d end up with dim, fuzzy-sounding connections.

They were testing out this new, homebrew switch system when I got to London in the mid-’90s. Titanic already had some corporate clients running off our regular switch, but now they wanted to test out our PC-rack with a few lower-volume clients. Some of these were restaurants and pubs in the West End. The test was a disaster. One of our new signups was Planet Hollywood. Two days after we hooked them up, they were on the horn to us: “Take this out of here! Disconnect this bloody thing immediately!”

I don’t know what became of the PC telecom switch project. My impression is that it quietly died right after this.

Or it got steamrollered by bigger crises, mainly public relations problems that were coming at us from all sides. In England and Australia, this took the form of industry rumors that our sales force was made up largely of ex-convicts.

Doesn’t that sound nice? It wasn’t entirely untrue, but there’s a big “but” there. Some of our guys in London and Sydney had been directors of English companies that went belly-up. In America, corporate bankruptcy may be regarded as a misfortune, but in England (to paraphrase Oscar Wilde), it looks like criminal carelessness. Because, you see, there’s an automatic presumption of fraud. So if your limited company goes into receivership, you may well be awarded a six-month holiday as a guest of Her Majesty. This is how we got some of our finest salesmen. No one else would hire them.

In America, our PR crises became constant, usually revolving around those nebulous “slamming” accusations I talked about before. It wasn’t just the Consumer Watchdog lady on the local TV news; eventually there were articles in the Union-Tribune and the L.A. Times, rehashing tales of complaints filed with the California Public Utilities Commission.

So far as the commission went, we thought we had a reliable friend in Sacramento in the form of state senator Steve Peace, who was trying to make a name for himself as point-man in utilities regulation. (Peace already had some renown as the youthful producer of the horror-comedy Attack of the Killer Tomatoes; but now he was past 40 and looking to add a bit more gravitas to his résumé.) But then, out of the blue, Peace turned on us. Without bothering to do any investigation — or give us a phone call, or even notice that Titanic Telecoms had donated to his last election campaign — he started issuing rote denunciations of our company and the long-distance industry in general.

So one day, I returned to San Diego from London and found J.J. and company counsel and two or three of the other top executives, huddled together all day in J.J.’s office, trying to hash together a cringing, pleading letter to Steve Peace.

“What’s going on in there?” I asked Lulu Kelly, our HR director.

“Oh, Steve Peace said a lot of stupid things, and now they’re trying to get him to take them back.”

Gradually, painfully, Titanic Telecoms took a lower profile and receded from the news. I ended up moving from London to Seattle, where I worked for another overleveraged telecom outfit, but I still had a storage unit near Old Town, and would check in with J.J. and pals from time to time. They gave up their sumptuous digs along La Jolla Village Drive and moved to a new headquarters way out in Scripps Ranch. And eventually got themselves gobbled up by a series of greater fools, ending with MCI WorldCom, which, as you know, went fabulously bankrupt in 2002.

This was almost exactly as J.J. Hughes had planned. Low-cost long-distance was an industry with a short lifespan, and Titanic Telecoms got out just in time. J.J. saw the future, yes he did; and he ate it.

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Great story—very Horatio Alger in the Digital Age. Shame the tech world isn't as wild and woolly as it used to be. Before people from all different backgrounds were able to find a niche; now it's almost exclusively the purview of coders.

Lol. Have no idea who “Titantic” was. But, sounds pretty accurate. Slamming was an egregious practice, targeted in particular at low income minority communities. Marty Emerald was among the press folk who exposed the practice. And, my constituents in the South Bay and in Imperial County were among the most frequently targeted victims. It is also likely true that I “attacked” the company/companies without regard to any political contributions they may have made. In fact, the likelihood is that I did not even know they had contributed (it is certain I didn’t care). Hard to believe these days, but my first campaign (1982) was the only time I personally did any fundraising. I called friends, family, and the local Firefighters Union asking for support. In the 20 years, thereafter, as an incumbent, I never made a single fundraising call. In fact, I paid absolutely no attention to who did or did not contribute. I was even known to fail to show up to my own fundraising events. This, of course, used to drive everyone nuts. But, I always hated fundraising, so I just didn’t do it. In 1984 no one ran against me. It may be that this fed my delusion that you could just “be a good legislator” and get elected on the merits. More likely, I was just young, stupid and lucky. In any case “Titantic” was certainly not alone in being unhappy with the fact that I couldn’t care less about either their contributions or their tortured explanations for their anti-consumer behavior. Not sure why this acutely unimportant historical minutiae merited the front page. But, be assured, the 65 year old version of Steve Peace is still “looking to add a bit more gravitas to his resume.” But, like so much in life, you seldom appreciate “what you got till it’s gone.” Turns out “Killer Tomatoes” was pretty heavy stuff. Cheers, Steve

No, Steve, your attack on the 1990s long-distance resellers was completely irresponsible. You attacked small- and mid-sized resellers but left the big boys (MCI and Sprint) alone—because you didn't DARE take them on.

"Slamming" was a complete hoax, as anyone with technical knowledge of the industry would know. Only a local telephone company could switch a customer's long-distance carrier.

You were completely in over your head when attacking this technical field, and you obviously haven't wisened-up since.

I left out "Marty" [sic: actually Marti] Emerald's name in my account because she made a complete fool of herself, blundering into our call center with her cameramen in January 1996, without a clue about what the story was supposed to be. She harassed our Mexican and Vietnamese telemarketers (who had NO idea what was going on), asking them, "WHY are you doing something ILLEGAL?" which of course they were not.

We called the cops and they moved her out.

When WorldCom bought MCI in 1998, as a telecommunications reporter I immediately knew in my gut it was fraudulent. It was like a flea buying an elephant. It was virtually impossible to be legit. Of course it wasn't, but a lot of people got fooled.

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