How Berkeley-based LMi.net bought itself back from the giant.
It’s an old story. A small company is bought by a big company and then loses its sense of independence. The small company’s founders reminisce about the good old days and sigh as they watch their company slip away. But the story of Berkeley’s LMi.net has a different—and happier—ending.
After LMi.net, a small Internet Service Provider that was one of the first to offer dial-up services, was acquired by Rocky Mountain Internet in 2000, the company’s staff was appalled at the impersonal management of its business and customers. LMi.net struggled under the new management for a year. Then the company changed LMi.net’s office locks and dispatched out-of-state representatives to remove staff from the building and guard the assets, says Jacki La Pointe, an accountant with LMi.net for 11 years. They also laid off all but a few of LMi.net’s workers, who stayed behind only to be inundated by calls from confused customers and vendors.
“It was hard to watch,” says co-owner Dan Callaway of Rocky Mountain’s implosion and LMi.net’s subsequent collapse. “After all the work we had put into the company, watching it fall apart was painful.”
The rest of the story has Hollywood written all over it. While the out-of-town reps stood guard over the building, co-founders Gary Morrell and Callaway and some of LMi.net’s laid-off staff looked for ways to rebuild their company. Two laid-off staffers stopped by the building every day and became friendly with the reps, eventually gaining entry into the building, La Pointe says.
“During these visits, one of us would distract them while the other rotated backup tapes and fixed any nagging server problems that required hands-on service,” La Pointe says. “None of our staff sought new jobs, and instead we all volunteered time in a one-room office in Berkeley, offered by a sympathetic friend in the industry.” La Pointe and the other staff refer to this period as “the dark days.”
“Whenever it comes up, we focus on the positive, like that LMi.net is one of the very few small [Internet Service Providers] that survived the dot-bomb era,” she says.
At the time, Morrell says selling to Rocky Mountain seemed like the right thing to do.
“We saw a big consolidation in the industry, with some providers even offering free Internet service,” Morrell says. “We thought, ‘We need to team up with a bigger company or we’re going to get squashed.’”
Morrell also thought the bigger company would help LMi.net provide more services to its customers, but that didn’t pan out. After months of legal wrangling, in 2001 Morrell and Callaway, who are both musicians, formed Locrian Enterprises—named for a mode of a major scale that starts and ends on its seventh note—and bought back their company.
Morrell, a longtime Berkeley resident who rides his bike to work every day, estimates that LMi.net lost about 10 percent of its customers during those times, although staff worked hard to meet customers’ needs.
“Once we were back in our building, we began putting the pieces back together,” La Pointe says. “We sent an announcement to customers on Nov. 1, 2001, “LMi.net IS BACK!”
For La Pointe, LMi.net is an antidote to a world gone corporate.
Here, there’s “no corporate baloney,” La Pointe says. “No dress code, hierarchies, micromanagement or large-scale waste. Management is flexible, generous, accommodating and humorous.” In fact, La Pointe says humor is the best thing about working at LMi.net. Customers are included in the fun, and receive news updates that include greetings such as “Happy Solstice, esteemed LMi.net customer. We hope the rotating planet finds you well.”
And chickens, don’t forget the chickens. They are revered here. Not rubber chickens (although that variety would surely be accepted, too), but real chickens. An LMi.net employee made news a few years ago when she started a photo gallery of fancy-feathered chickens and posted the images in her office window. Her goal? Educate people about the variety of chickens that exists, and inspire folks to consider vegetarianism.
And the chicken references don’t stop here. Morrell plays guitar, sings and writes songs for a progressive rock jam band called Ten Ton Chicken. Seven years ago, a handful of employees surprised Ten Ton Chicken when they showed up to the band’s gig at a Seattle club disguised in Groucho Marx glasses.
In addition to the fun, putting their company back together has been serious business for Morrell and Callaway.
Finding footing again in 2002, they formed a partnership called Phrygian Enterprises—named for a different musical mode of a major scale that starts and ends on its third note—and bought the LMi.net building at Martin Luther King Jr. Way and Virginia in Berkeley.
Although LMi.net competes against large, national corporations, the little company, the only full-service Internet Service Provider in the East Bay, is drawing loads of locals. Lower rates from competitors may lure some customers away, but LMi.net’s personal service always prevails, says Morrell. He says choosing LMi.net is like choosing the farmers’ market over Safeway.
“People like that they can always get ahold of someone who can help them, whether it’s by cell phone, pager, or walking into the office,” says Morrell, whose dog Drake, aka Golden Boy, greets anyone who walks in the office. “I think there will always be a place for us because we’re accessible, and we’re good and patient with people.”
Morrell and Callaway—who share a community-minded sensibility with their East Bay customers—are committed to being both local and green. The company recently added solar panels to the roof and plans to add more as they are able. They also run a recycling program and deliver e-waste and Styrofoam to facilities for reuse.
In 16 years, LMi.net has built a customer base that ranges from Internet-savvy high school students, to corporate executives, to seniors logging in for the first time. LMi.net welcomes techno-geeks as well as novices, Morrell says. And, while the company has the ability to serve the country and the world, 90 percent of LMi.net’s nearly 10,000 customers are in the Bay Area, he says.
Some customers are even members of “The Love Club” and post “love notes” to the company website, thanking the company for resolving their problems in a quick and courteous manner. “It’s so bloody nice to deal with people like the LMi staff, I can’t tell you how much it’s appreciated,” wrote one member of The Love Club. “You really came through for us,” wrote another. One customer unexpectedly brought a giant carrot cake to the office inscribed with “LMi.net rocks!”
Alexandra Andrews, webmaster for CancerSupportCare.com, an online resource for cancer patients and their families, discovered LMi.net when her DSL provider went out of business. In 2006, she took advantage of the company’s service that allows her to run her website on a computer at the LMi.net office.
Last year, web users from 173 countries accessed CancerSupportiveCare.com, Andrews says. She attributes the site’s growth to LMi.net and the unlimited bandwidth they offer. “It’s the difference between a candle and a flood light in the dark of the Internet,” she says.
After nearly 20 years in business, much has changed for Morrell and Callaway, who no longer spend their days at construction sites, working with contractors and running network cables through ceilings and conduits as they did in the company’s early days. But plenty of things haven’t changed about LMi.net, and while Morrell admits he would like the company to grow a little bit, he doesn’t see it growing into an industry giant.
“The kind of company we are fits in with the way people think of Berkeley,” Morrell says. “We’re laid-back and quirky and we provide really good service. That has all stayed the same.”
Gina Gotsill is a freelance writer based in the East Bay.