Tag: startups

black storm networks

~ ginsu ~ Leave a comment

So what’re you up to these days?

I’m spending a good amount of time in residence with my old friends at Storm Ventures, which reminds me of the last time I sat around with them, back in 2002. Coincidentally that was also around the last time the sky was falling, though the dot-com implosion was more localized than today’s lovely global financial crisis.

Although more contained, I think in many ways that downturn felt more severe in my world, the tech industry centered around Silicon Valley. It seemed that there were more local job losses, but more than that, the feeling of panic ran a little deeper, and wasn’t backstopped by the recent practical experience that we have today because of the prior crash. When the dot-com bubble burst in 2000, the prior domestic market crash was in 1987, and 13 years is enough time for people to forget, long enough for the prime of a career to pass through the ephemeral industries of the tech world. In 2008, the last crash was only 8 years ago, so now most people working here remember what happened the last time, and they can separate the chickens from the oracles.

A lot of people say that an economic downturn is a great time to start a new business. Of course, there’s a difference between saying it because others say it, and saying it because you’ve seen it before. In 2002, one of the partners are Storm was saying it to me, and it all made logical sense: costs were lower, recruiting was easier, competition was scarce. But I hadn’t seen it before. Tae Hea Nahm and Tim Danford at Storm were sure it was the right time to incubate a company, so they formed Black Storm Networks and recruited the founding team of Ajay Mishra, Pat Calhoun, Bob Friday and Bob O’Hara. The founders huddled in Storm’s offices through the dark days of telecom nuclear winter and built the company piece by piece.  I was lucky just to hang around and watch the sweat and optimism they put into every single day.

Jump ahead to 2005 and Black Storm had become Airespace, the leading startup for a new class of enterprise wireless networking equipment.  That year, Airespace was acquired by Cisco in a great deal for both sides. I was lucky again, for by that time my peripatetic career had allowed me first to invest in the company for another firm, and then to join the team in time to help the last push.  For most people, the story of any startup ends with the liquidity event. But I enjoy watching the afterstory too; I like to follow whether the acquired product continues to succeed, whether the team has an impact in the new company and afterwards. On that measure as well as others, I’m really proud of the Airespace team.

The product and its successors achieved a dominant market position. Airespace’s CEO, Brett Galloway, has become a senior exec at Cisco responsible for all wireless and security products. Pat Calhoun is now the CTO of one of Cisco’s biggest business units. Bob Friday continues his wireless wizardry as a director of engineering for Cisco. After several successful years for Cisco, Ajay joined Airespace’s biz dev paladin, Bob Tinker, for another startup run. Bob O’Hara pulled perhaps the best move, retiring from Cisco last year to live in Twitterville.

Anyway, my fondness for that team and those days brings me back to these days, back at Storm with time to dream. I believe it because I’ve seen it:  an economic downturn is a great time to start a new business.

Update:  Bob O’Hara adds his perspective.

apples to apples

~ ginsu ~ 2 Comments

Facebook turned 5 years old last week, and a couple of commentators took the opportunity to compare the company’s progress unfavorably to Google’s.

I understand the compulsion to compare every hot startup to the current media darling that literally put its name next to the definition of “Zeitgeist” – but still, I don’t believe there is any practical value in that exercise.  A meaningful comparison compares things of like kind, and comparing every company to the once-in-a-decade champion is not apples to apples.  Take a look at this list of companies, which I’d say are all the same kind of apple (of course one of them is literally an Apple):

Company Year Founded Year IPO Feb 09 Market Cap
HP 1939 1957 $87 B
Intel 1968 1971 $83 B
MSFT 1975 1986 $173 B
Apple 1976 1984 $91 B
Oracle 1977 1986 $91 B
Cisco 1984 1990 $99 B
Google 1998 2004 $119 B

These are the true giants of Silicon Valley (plus our favorite giant from up north), all companies that have spent a goodly amount of time with a market cap over $100 billion.  Comparing any private company to these monsters is a fool’s game; it’s like comparing a college basketball player to Michael Jordan.  Actually it’s worse than that – projecting athletic talent is considerably easier than projecting $100+ billion success for a company, because there are orders of magnitude more points in a company where externalities and luck play a tremendous factor.  (I always like to recall that Intel and Microsoft were initially made giants not by their own strategy, but by the strategic decision made by IBM when it chose to outsource production of its PC microprocessor and operating system.)  These true giants are Black Swans, by definition nearly impossible to predict, and useless as comparative points except when holding both points in retrospect.

If you must make comparisons, it’s more realistic to compare to the next tier, for example:

Company Year Founded Year IPO Feb 09 Market Cap
Sun 1982 1986 $4 B
Amazon 1994 1997 $44 B
Yahoo 1995 1996 $19 B
eBay 1995 1998 $18 B

I could put a dozen more on that list, but I’ll let you pick your own peer group.  Any one of those companies (yes, even that one that you think is irrelevant/dying/dead) could still take the multi-decade journey to giant-hood.  But even if they never do, they’ve accomplished something extraordinary in growing up from a tiny Silicon Valley startup (with one favorite from up north) to an independent company, a true a difference-maker in technology and the daily lives of millions upon millions of people.  Because they haven’t had such outstanding externalities and luck in their favor, they are a better basis for comparison.