Dan Borislow

Dan Borislow
Daniel M. Borislow

Dan Borislow
Born September 21, 1961 (1961-09-21) (age 50)
Philadelphia, Pennsylvania, U.S.
Residence Palm Beach County, Florida
Occupation Telecommunications, Horse breeding
Spouse Shelly
Children Danny, Kylie
Website
magicJack website

Daniel M. Borislow (born September 21, 1961) is an American entrepreneur, sports team owner, inventor, and thoroughbred horse breeder. Originating in the Philadelphia, Pennsylvania area, Borislow attended Widener University and worked in cable construction and landscaping before going into the telephone business. He founded Tel-Save, Inc. to resell access to AT&T long-distance lines in 1989. Borislow took the company public in 1995, and two years later brokered a $100 million deal with AOL that made it the exclusive telephone service of its users. At its peak in early 1998, Tel-Save had sales of $300 million and was valued by Wall Street investors at $2 billion. However, due to the financial strain of paying off the AOL deal, Tel-Save lost $221 million in 1999, and Borislow sold his stock and retired.

In his brief retirement, he focused on his horse racing career, sending Talk is Money to the 2001 Kentucky Derby although the thoroughbred did not complete the race. Borislow's most successful horse yet has been Toccet, who won four graded stakes, among which are the Champagne and Hollywood Futurity in 2002. After selling most of his horses in 2004, Borislow set forth plans for a new voice-over-IP business which became the magicJack. Invented in 2007, the magicJack is a small product which can be plugged into a computer's USB port and allows for unlimited calling from regular telephones. In 2010, YMAX, the company behind the magicJack, merged with an Israeli company and became a publicly traded corporation. Borislow also purchased a controlling share of the Washington Freedom women's professional soccer team. Borislow and his family live in Palm Beach County, Florida, where, through D&K Charitable Foundation, Borislow issues grants to charitable causes.

Contents

Business career

Tel-Save

In 1989, Borislow founded Tel-Save when he was in his 20s to resell access to AT&T long-distance lines.[1] The company was based in New Hope, Pennsylvania, and its primary market was toward small and medium-sized businesses.[2] Borislow took the company public in 1995 and had an initial public offering of three million shares.[3] He then invested in his own long distance network by deploying five Lucent 5ESS-2000 switches throughout the United States.[4] By 1997, Tel-Save was making $20 million a year.[5]

In 1997, Borislow negotiated a three year deal with America Online that granted Tel-Save exclusive marketing rights to sell long-distance service to AOL users. AOL users, meanwhile, would now be billed online for their local, long distance, cellular, and internet services.[6] His original asking price was $50 million, but after negotiations, the figure increased to $100 million, in addition to half of future profits and 15 percent of the company's stock.[5] Bob Pittman, president of AOL, compared Borislow to Ted Turner for his vision and marketing abilities,[6] but later called him an "asshole."[7] In December of that year, Borislow was behind the merger of Tel-Save and STF, a similar company that provided telecommunications services to office buildings.[2]

At its peak in early 1998, Tel-Save had sales of $300 million and was valued by Wall Street investors at $2 billion. His personal stock in the company was $500 million. Borislow's America Online deal was the catalyst for other "portal deals" with AOL. The company's fortunes turned due to the financial strain of the AOL deal, and following an annual loss of $221 million in 1998,[7] he resigned as CEO of the company on January 1, 1999. Gabriel Battista was named CEO in his absence.[6] Tel-Save is now known as Talk America.[8]

magicJack

Main article: magicJack

In 2005, after retiring from business to focus on his horse racing career, Borislow set forth plans for a new voice-over-IP business, with an initial name of Talk4free.[9] He created YMAX Communications Corporation in April 2006 as a communications and equipment service.[10] YMAX's profits come from the production of the magicJack, a small device which can be plugged into a computer's USB port and allows for unlimited calling from regular telephones.[11] Although Borislow invented the product in 2007 and has applied for patents from the U.S. government, he is not the CEO, deferring the job to Donald Burns, former CEO of Telco Communication Group.[12] Borislow and Burns shared the payment of $25 million to start up the company.[13]

Before Borislow launched a widespread television campaign in January 2008, the company sold less than 1,000 magicJacks per day. By June, he was selling 8,000-9,000 per day and had roughly 500,000 subscribers in total.[14] Borislow attributes its success to its pricing, at $40 in the first year of service and $20 each year thereafter. Although its voice quality has been criticized, Ted Kritsonis of The Globe and Mail said the "MagicJack was still better than most cell phones I've tried."[15]

In 2009, Florida Attorney General Bill McCollum investigated a claim that Borislow falsely marketed the magicJack as having a free 30-day trial of the product. In reality, the customer must specifically cancel the trial prior to the 30-day mark, otherwise the credit card would be automatically billed. While Borislow maintained that his company's actions were not illegal, he reached a settlement on April 15, agreeing to pay the state of Florida $125,000 for the cost of the investigation. He said the company resolved over 500 complaints and added a disclaimer on the website clarifying the misconception.[16]

VocalTec, an Israeli telephone company, acquired YMAX in July 2010. Since Borislow and other YMAX businessmen contributed most of the equity, they essentially run the merged business, which kept the "YMAX" moniker. VocalTec was a publicly traded company, so YMAX went on Nasdaq following the merger. In 2010, YMAX had a market capitalization of $300 million and is expected to make $110 million to $125 million in sales.[11]

Horse racing career

After watching horse races at Philadelphia Park for some time, Borislow decided to go into the business in 1991. He frequently wagered on trainer John Scanlan's horses, so he requested Scanlan to be the conditioner for his horses. Among Borislow's first acquisitions was broodmare Beautiful Bid, who gave birth to Breeders' Cup Distaff winner and Eclipse champion Beautiful Pleasure. In 2000, he sold Beautiful Bid for $2.6 million.[17]

Borislow bought a $1.8 million yearling in September 1999 that he would name Talk Is Money. The thoroughbred was named after Tel-Save, with Borislow saying, "Every time someone was talking on the phone, I made money."[17] Talk Is Money's best finish came at the Tesio Stakes in April 2001, where the horse placed second. This qualified it for the 2001 Kentucky Derby, and Borislow hired jockey Jerry Bailey, who won the 2000 Kentucky Derby with Macho Uno.[18] At 47-1 odds, Talk Is Money came in last in the Derby and did not finish the race.[19]

Borislow's most successful horse yet has been Toccet, who won four graded stakes, among which are the Champagne and Hollywood Futurity in 2002. Toccet's name is a misspelled tribute to former National Hockey League (NHL) player Rick Tocchet. Toccet was named runner-up to Vindication for the American Champion Two-Year-Old Colt in 2002, a part of the Eclipse Award.[17] Once a favorite to enter the 2003 Kentucky Derby, ankle injuries early in the year derailed the horse's career.[20] It only won one listed stakes after its juvenile season, out of 15 starts, and now stands at Castleton Lyons.[17]

After a dispute with the Internal Revenue Service, Borislow sold a majority of his horses at the Fasig Tipton November sale in 2004. In February 2005, he was in a partnership with baseball manager Joe Torre and hockey player Keith Jones to buy Wild Desert. In June of that year, Wild Desert won the Queens Plate off a layoff of over 10 weeks.[17]

Women's Professional Soccer

In 2011, Borislow bought Women's Professional Soccer franchise Washington Freedom, moved it to South Florida, and renamed it magicJack.[21] Borislow faced criticism for not creating a team web site, doing nothing to market the team in preseason, and playing in a stadium that has a capacity of only 1,500 — less than the U.S. Soccer-mandated minimum of 5,000. [22] Additionally, magicJack players and the WPS players union filed a grievance with the league for violations of the Standard Player Contract Provision, the FIFA Code of Ethics, WPS Media Policy and U.S. Soccer Federation Coaching Requirements.[23]

As a response to ongoing conflicts with Borislow, in June WPS moved to exercise its right to terminate his franchise at the end of the season for breach of contractual obligations. Borislow subsequently filed an injunction that would force the league into arbitration rather than settling the matter with the league’s Board of Governors. The team was disbanded on October 28th, 2011.[24]

Philanthropy

D&K Charitable Foundation was established by Borislow in 1997 with a $21 million stock donation. In the first two years, he tried to use the charity to buy and preserve a tract of land in New Hope, Pennsylvania. This venture failed in 1998 when the property owner declined Borislow's offer. Following this, D&K made donations to the Clearwater Endoscopy Center and the Center for Digestive Healthcare in Clearwater, Florida until 2001. Since then, it has issued varied grants to causes Borislow supported, such as $2.75 million to two yeshivas and $173,450 to a West Palm Beach, Florida private school. Tax records indicate that Borislow and George Farley, the chief financial officer of the non-profit, split approximately $2.1 million in profits from 2001-2005, while $1.6 million went to charitable causes. Borislow drew criticism in 2007 when he paid himself $1.7 million through the charity.[25]

Personal life

Borislow lives with his wife, Michelle, and two children, Danny and Kylie, in Palm Beach County, Florida.[17] The Borislows own two dogs, Magic and Jack. Kylie is the center midfielder on the magicJack Hot Shots, a youth soccer team coached by her father and composed of 10 to 12-year-old girls. They went undefeated in the 2008 Gothia World Cup in Denmark.[26]

In November 2005, he sold a property in Brigantine, New Jersey for $925,000. he still maintains a home in Brigantine, NJ.[27] In his free time, he enjoys playing soccer, watching sports, and deep sea fishing.[28] Borislow's yacht, dubbed The Triple Crown, has three bedrooms, nine flat screen televisions, and golden fixtures.[25]

Footnotes

References

  1. ^ Grant 2005, p. 316
  2. ^ a b "Talk America Holdings Inc. - Securities Registration: Business Combination (S-4)". Securities and Exchange Commission. EdgarOnline. October 29, 1999. http://sec.edgar-online.com/1997/10/29/09/0001005150-97-000860/Section5.asp. Retrieved September 8, 2010. 
  3. ^ "Equity Offerings Scheduled for the Week Ahead". The New York Times (The New York Times Company). September 18, 1995. http://select.nytimes.com/gst/abstract.html?res=F60615FB3A5A0C7B8DDDA00894DD494D81. Retrieved September 6, 2010. 
  4. ^ "Talk America Holdings Inc. Amended Annual Report (10-K/A) Part 1". Securities and Exchange Commission. EdgarOnline. April 9, 1999. http://sec.edgar-online.com/1999/04/09/15/0001005150-99-000297/Section2.asp. Retrieved September 8, 2010. 
  5. ^ a b Munk 2004, p. 102.
  6. ^ a b c Gunther, Marc (March 30, 1998). "The Internet Is Mr. Case's Neighborhood". Fortune (Time, Inc.). http://money.cnn.com/magazines/fortune/fortune_archive/1998/03/30/240097/index.htm. Retrieved September 22, 2010. 
  7. ^ a b Munk 2004, p. 103.
  8. ^ "Talk America rises on good quarter outlook". The Washington Times (The Washington Times LLC). July 8, 2003. http://nl.newsbank.com/nl-search/we/Archives?p_product=WT&p_theme=wt&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=0FC2B4A243569022&p_field_direct-0=document_id&p_perpage=10&p_sort=YMD_date:D&s_trackval=GooglePM. Retrieved September 23, 2010. 
  9. ^ Greenberg, Herb (September 13, 2005). "Dan Borislow rides again". MarketWatch (Wall Street Journal). http://www.marketwatch.com/news/story/dan-borislow-rides-again/story.aspx?guid=%7BEDB80568-2C18-4CC7-A23A-C5D00DCF707B%7D. Retrieved October 5, 2010. 
  10. ^ "New Businesses". The Providence Journal (ProQuest Archiver). April 6, 2006. http://pqasb.pqarchiver.com/projo/access/1017546111.html?dids=1017546111:1017546111&FMT=ABS&FMTS=ABS:FT&type=current&date=Apr+06%2C+2006&author=&pub=The+Providence+Journal&desc=NEW+BUSINESSES&pqatl=google. Retrieved October 5, 2010. 
  11. ^ a b "Company Behind MagicJack To Banish Calling Costs". Associated Press. CBS News. August 13, 2010. http://www.cbsnews.com/stories/2010/08/13/ap/tech/main6770461.shtml. Retrieved October 5, 2010. 
  12. ^ Greenberg, Herb (March 7, 2007). "Going after Vonage, Skype". MarketWatch (Wall Street Journal). http://www.marketwatch.com/story/telco-veteran-borislow-targets-vonage-skype-with-cheaper-service. Retrieved October 5, 2010. 
  13. ^ Lagesse, David (June 6, 2008). "Look Out, Vonage. Here Comes magicJack". U.S. News and World Report. http://money.usnews.com/money/business-economy/technology/articles/2008/06/06/look-out-vonage-here-comes-magicjack.html. Retrieved October 18, 2010. 
  14. ^ "Cheap phone service calls customers". Associated Press. Youngstown Vindicator. June 18, 2008. http://www.vindy.com/news/2008/jun/18/cheap-phone-service-calls-customers/. Retrieved October 5, 2010. 
  15. ^ Kritsonis, Ted (March 12, 2008). "MagicJack casts fair spell". The Globe and Mail. http://www.theglobeandmail.com/news/technology/magicjack-casts-fair-spell/article672309/. Retrieved October 5, 2010. 
  16. ^ Salisbury, Susan (April 15, 2009). "Local firm settles with Attorney General, will reimburse state $125,000". The Palm Beach Post. http://www.palmbeachpost.com/business/content/business/epaper/2009/04/15/0415magicjack.html. Retrieved October 18, 2010. 
  17. ^ a b c d e f "Breeders' Cup Bios: Daniel Borislow". Breeders' Cup. http://www.breederscup.com/bio.aspx?id=7079. Retrieved September 2, 2010. 
  18. ^ Ziegel, Vic (May 3, 2001). "Talk About Your Longshots". New York Daily News. http://www.nydailynews.com/archives/sports/2001/05/03/2001-05-03_talk_about_your_longshots.html. Retrieved September 23, 2010. 
  19. ^ "Bailey Will Make It 3 Horses In 3 Races". St. Petersburg Times: p. 10C. June 8, 2001. 
  20. ^ Ziegel, Vic (January 24, 2003). "Toccet's Derby Path Off-Course". New York Daily News. http://www.nydailynews.com/archives/sports/2003/01/24/2003-01-24_toccet_s_derby_path_off-cour.html. Retrieved October 3, 2010. 
  21. ^ Kennedy, Paul (May 12, 2011). "Pro sports' worst-run franchise". Soccer America Daily. http://www.socceramerica.com/article/42203/pro-sports-worst-run-franchise.html. Retrieved July 6, 2011. 
  22. ^ Pel, Jenna. "A Few Thoughts on WPS vs. Dan Borislow Round 392 (A.K.A. When Things Got Litigious)". All White Kit. http://www.allwhitekit.com/?p=7129. 
  23. ^ Eileraa, Anne-Marie. "Grievance Based Upon Actions of WPS Franchise Owner Dan Borislow". WPS Players Union. http://www.allwhitekit.com/wp-content/uploads/2011/08/WPS_Grievance_-_magicJack_-_July_20111.pdf. 
  24. ^ Women's Professional Soccer terminates franchise, Seattle Post-Intelligencer
  25. ^ a b Lipman, Harvy (June 10, 2007). "Charity's founder paid himself $1.7M". The Bergen Record (North Jersey Media Group, Inc.). http://www.ncrp.org/news-room/news-2007/169-charitys-founder-paid-himself-17m. Retrieved September 2, 2010. 
  26. ^ "magicJack Hot Shots Win World Youth Soccer Championship". Business Wire. Technology Marketing Corporation. July 18, 2008. http://www.tmcnet.com/usubmit/2008/07/18/3555195.htm. Retrieved October 18, 2010. 
  27. ^ "Real Estate Transactions/ Atlantic County". Press of Atlantic City (NewsBank). November 20, 2005. http://nl.newsbank.com/nl-search/we/Archives?p_product=AC&p_theme=ac&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=110C81485EA19168&p_field_direct-0=document_id&p_perpage=10&p_sort=YMD_date:D&s_trackval=GooglePM. Retrieved September 2, 2010. 
  28. ^ "Strong and Proven Leaders". YMAX Communications Corporation. 2007. http://www.ymaxcorp.com/management.html. Retrieved September 2, 2010. 

Bibliography

  • Grant, Tina (2005). International Directory of Company Histories. 70. Detroit: St. James Press. 
  • Munk, Nina (2004). Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. HarperCollins. ISBN 0060540354. 

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