HALIFAX -- In 1998, Core Networks consisted of three software developers with
an idea, working on computers in the living room of a south-end Halifax apartment.
"It was a 900-square-foot apartment and we set up a living room with
three desks and that was our office," Chris Thornhill, one of the founders
of Core Networks and director of systems architecture, recalled in a recent
Last month Core Networks, which developed software to manage and upgrade broadband
Internet services provided through cable, was sold to U.S. software service
giant SupportSoft Inc. for $17-million (U.S.).
Today Mr. Thornhill, who will continue to work with Core under the new owners,
marvels at how the company survived and grew when so many other Internet service
providers flopped spectacularly.
The software developer and entrepreneur Jeff Campbell were in their 20s when
they left Halifax Cable -- it later became EastLink Communications -- after
helping develop systems to provide Internet services over television cable.
When cable companies began providing Internet services in the early 1990s,
they had to send out installers to hook up the modems and computers. Mr. Thornhill
and his colleagues began working on a system that would automate the process,
allowing cable subscribers to sign up for the Internet on-line and to hook
up with a modem they could buy at an electronics store.
The software that came to be known as CoreOS bundled all the Internet services
for the user and provided information to the cable company on the user's activity.
The system also enabled cable company customer service representatives to quickly
get information to assist Internet users who had problems with their systems.
"Cable companies came out with a standard [service] and we saw potential
in that to start a company," Mr. Thornhill said. "We saw what we
thought could be done rather than just doing the bare necessities. It's not
But the idea of a single service package caught on. The first client for the
newly minted Core Networks in 1998 was Mr. Thornhill's former employer EastLink.
Then Atlanta-based Cox Communications signed on, and within three years the
small Halifax company was providing broadband services in South America and
New Zealand with customers such as TelMex, the Mexican phone company and Comcast,
a major cable provider around the world.
Venture capital was provided by Royal Bank of Canada Financial, Sky Point
Ventures and ACF Equities, both of Halifax as well as Lake Street Partners
Mr. Campbell, who received several awards for his entrepreneurial efforts,
left the company abruptly in 2002 for what he cited as personal reasons. Mr.
Thornhill and a staff that grew to about 50 employees continued to expand the
suite of broadband services in the company's new offices in a suburban Halifax
Core Networks president Craig Soderquist said that in recent months company
executives realized they had to find more financing to expand their services
and attract larger clients.
But when he approached potential backers, he found several companies who wanted
to take over Core Networks.
"The best way to unlock the value and potential in this operation was
to team up with a bigger company," said Mr. Soderquist, who comes from
California. "Having the financial clout of a large public company also
helps you. When you're selling software to software providers who are rolling
this out to millions of people and modelling their own business practices around
that sometimes there is a reluctance to buy from a small startup."
The private company doesn't release its financial results but Mr. Soderquist
said it is projecting revenue of between $8-million to $12-million over the
next year by attracting major clients on the scale of AOL Time Warner, Verizon
and Bell South.
Rhada Basu, chairman of SupportSoft, which specializes in providing broadband
management services to large companies, said the acquisition of Core Networks
will expand its range of services for the network of home and small businesses
as well as expanding its technology base.
For Mr. Thornhill, the sale of the company hasn't made him richer -- he has
only a small shareholding in the company he founded -- and he's excited about
teaming up with SupportSoft developers.
Under SupportSoft ownership, the Halifax office of Core Networks will continue
to develop new products for broadband software.
"They're not taking away any technology and this just opens up more opportunities
to write more products and do it the right way," Mr. Thornhill said. "Most
software companies don't make it and we've kept more than 40 local people employed
for five years and we expect to see some expansion."