Texas Ranger Jonah Yokubaitis treads on the competition

In 1994, Jonah Yokubaitis figured that the Internet tsunami would create worthwhile business opportunities. With a few thousand dollars, he started Texas.Net, a provider of Web hosting and T-1 connections to Texas corporations.

Eschewing VC and public market investments, Mr. Yokubaitis grew his business the old-fashioned way and has been profitable from the start. He watched competitors appear from nowhere and become megacorporations, only to flame out within a few years.

Now he's having the last laugh. Texas.Net has made three acquisitions (and is closing on its fourth), mostly in data-center assets from the likes of Reliant Energy and Data Foundry. The acquisitions have helped the company expand quickly into new markets. "We are taking advantage of failed business models and buying assets on the cheap," says Mr. Yokubaitis.

"We don't pay more than 20 cents on a dollar," he says, and admits that if he had to build these data centers from the ground up, he would not be able to make any money. "We don't expand too much. We grow one market at a time and have benefited from the regional focus," he says . He says he has no plans to expand outside of Texas.