By RAY ESTRADA — April 7, 2009
What was started in an Isla Vista apartment for $8,000 in 1986 has changed into a multimillion-dollar high-tech company that thrives in today’s crowded computer network industry.
In 1983, John Petote came to the South Coast with an associate’s degree in computer management from a Pittsburgh, Pa., college and a desire to earn a living near the beach.
But it was Petote’s business sense and ability to adapt to a changing industry that allowed him to become the founder and chief executive officer of what today is CIO Solutions in Goleta.
“I’m more of a business person than a technologist,” he said during an interview in his company’s conference room.
Petote also is an angel investor, which means he provides venture capital to many tech companies in the area. He has made more than 40 since 1997.
“I love talking to really motivated, smart people,” Petote said. “I’m really good at reading people and cutting through BS.”
After making $20,000 in its first year, Petote’s company has gone through four recessions and two company transformations to keep up with a fast-changing computer industry.
Petote has weathered storms ranging from the dot.com bust to the drop in defense industry spending, which once was a key part of the South Coast industrial scene.
CIO Solutions made more than $7 million last year, he said. Over the years, Petote has gone from selling computer hardware to providing a variety of network solutions for clients such as Cottage Hospital.
Now, Petote said CIO Solutions performs three main functions: It offers managed services, or “IT in a box,” which means taking care of or supplementing a client’s computer network needs for a monthly fee; the company also can provide telephone systems for companies such as Mentor Corp., which are built into computer networks; and, it provides “high-end enterprise,” which “separates us from our competition,” the CEO said.
CIO Solutions employs 20 men and women. Eleven of those are highly qualified engineers, Petote said. “If there’s a big ‘fire’ with a network or something, they can out it out in a hurry,” he said.
More than half the company’s revenue comes from the health-care industry, Petote said. That makes CIO Solutions “recession resistant” since its clients, including Cottage and Samsun, are flourishing and have a growing need for network services.
Petote said the biggest challenge for his business is recruiting quality employees and retaining them because of the high cost of living along the South Coast. “It doesn’t bother me a lot because my competitors have the same challenge,” he said. “It comes down to this is a service business – no intellectual property; it’s all about execution on a consistent basis.”
As was the case for many firms, November and December were bad months for CIO Solutions. However, Petote said February showed an upswing for his firm. “We were on fire,” he said. He said more business is in the pipeline for March and April.
“The three things I tell people to get through a recession are: Cut out your fat; take advantage of market share opportunities; and do whatever you have to in order to keep your good people.”
As for investing, Petote said he always is looking for a another good opportunity through his network of business contacts.
“There are a lot of companies under the radar,” Petote said. “It’s a great time to start a company, believe it or not – if you have the money.” He said the South Coast is “very vibrant because people have money here and aren’t afraid to spend it.”