Since opening for business in August, LibertyBay.com has become a nationwide Internet service provider with a network capable of supporting 1 million customers.

It’s the kind of operation that could have been headquartered anywhere, but founders Sterling Griffin and Don Bartlett decided its base of operations should be in Tacoma. Not just because they both have ties to the community, they say, but because of the attractiveness of operating costs here.

“Operations based in Seattle and Bellevue have gotten a lot of play recently,” says Todd Ostrander, who recently was named president and CEO of LibertyBay, “but prices for real estate have skyrocketed.”

And it’s not just the cost of doing business that has become prohibitive, says Ostrander, who previously was a financial systems analyst and cochairman of the Electronic Interchange Steering Committee at The Boeing Co. and electronic commerce program manager at Egghead.com.

“People can’t afford to drive and live in Bellevue,” he says, adding that he liked living there but was happy to make the move to Tacoma.

Tacoma’s hospitality is one of the biggest enticements for high-tech companies looking for a place to settle, says LibertyBay Marketing Director Jim Richards.

“The City is trying to have a renaissance and rebirth,” Richards observes. It is trying to fuel that rebirth through incentives to Internet businesses, he adds.

Economic development specialist Merten Johnson points out that in 1996, for example, Tacoma exempted Internet service providers from its B&O tax, which is based on gross earnings and the number of employees a company has.

Richards points out that in a time when Internet companies are struggling to find qualified applicants, Tacoma provides prospective employees who have the skills required by the high-tech industry.

“There is a large talent pool in Tacoma,” says Richards. “The local technical schools are producing the kind of talent we need.”

In a market crowded with Internet service providers, LibertyBay has attempted to separate itself from the pack by leasing communications infrastructure from companies such as Level 3 Communications, Cable and Wireless and Electric Lightwave rather than developing its own. The savings are passed on to LibertyBay customers, explains Ostrander. Unlimited local dial access costs LibertyBay customers 10 percent less than what other companies charge for access, he says.

“We are really coming from a virtual perspective,” he says. “We have out-sourced to our partners. We lease at a lower price, and, as a result, do not have to bear the infrastructure costs.”

Yet the company isn’t anticipating profits in the immediate future—perhaps the end of 2000.

“We will reinvest in our company through acquisition to continue our growth,” says Ostrander. “By 2001, we expect to sustain business at a profitable rate.”

He also expects growth in the staff size.

“We expect to double the number of employees to 100 or 120 by the first quarter of 2000,” says Ostrander.

LibertyBay currently has 50 employees, most of them involved in one way or another with customer service.

“We do not out-source customer service,” says Ostrander.

Ostrander appears eager to share other long-range plans but decides it’s premature. Perhaps in the next few months, he says.

“There’s a huge opportunity to create a national Internet service provider to support small business,” he says, adding: “It’s one thing to have a great business idea, another to execute it.”

LibertyBay.com hopes to execute that model, in part, by generating attention with a national ad campaign. The company recently unveiled three new ads that have already begun running on network cable stations. Based on market research, the ads target the frustrated Internet user looking for better service and an affordable ISP.

“These spots are designed to tap into the core frustrations our target audience has when using large, impersonal ISPs,” said Ostrander. “Our research has shown that users are becoming increasingly resistant to paying $20 and more a month to their ISPs only to get busy signals while logging on and poor customer service when they have questions.”

By Michael May for the Business Examiner