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Startups: Technology Execution Play

At the opposite end of the spectrum from the concept and Zeitgeist heavy startups of the web age, is the kind of startup without neither any particularly great new idea, nor a secret new technology, simply doing something which is really hard to do and only very few people would know how.

During the late 1990ies, the Internet had been growing by leaps and bounds, requiring a doubling in capacity every couple of months for many types of networks and networking gear was constantly running out of steam and needed to be upgraded with the next generation of higher capacity equipment. So just building the next bigger, better gear sounded like a reasonable thing to do, except that it was easier said than done - specially at a breakneck pace of 18-24 months development cycles, barely ahead of Moore's law. Until recently, building telecom and networking equipment had been a relatively specialized niche craft, practiced mostly in the R&D labs of a small number of companies, selling to a boring, utility-like industry. With a small pool of people who would know how to build something like that, those crazy enough to try had a pretty good chance to succeed - if they could pull it off and execute. Many would succeed quite well (in terms of return on investment) without even having to build a real business to sell their product - they would be acquired by some established equipment manufacturer who desperately needed something like this, but whose internal R&D was years behind schedule - partly because, their most experienced staff had run off to start companies - often getting bought back by the companies they had left.

This was the climate in which we started Xebeo Communications, to build the next generation packet switch for carrier networks. We had no experience or track-record in business, other than having worked on the development of similar systems before. Nevertheless we raised some double-digit millions in venture capital funding on our technology expertise alone (Ok, those were crazy times and people got a lot more money to go sell dogfood on the Internet...).

The idea was simple, but the execution required a large and highly skilled team with a broad range of expertise: VLSI chip design, electro-optical componentry, hardware systems and circuit design, high-speed signals and thermal flow simulations, mechanical engineering, embedded high-availability software and development of specialized communications protocol software. And all this had to be put together into a working system in less time than any reasonable estimate, while pushing the technology close to the edge of what is possible at the time. For example, the contract manufacturer asked to keep one of the circuit boards for display in their lobby - it had been the most complicated one they had ever built thus far...

It was basically build it and they will come - we actually DID build it, but they never came. The bottom had fallen out underneath the tech market in ca 2001 leaving tons of unused equipment around at fire sale prices. Nobody needed to double any capacity anymore for quite some time. The company was acquired for cents on the dollar and after some some time of trying to find a niche for it, the project was eventually canceled - a white elephant from a bygone area whose time had never really come. [They had ultimately failed to see or take advantage of the real value of what they had aquired - not the product, already obsolete by then - but the team who could build it.]