The race for glory is over for most of 1998's startups, but a few are still in the running If you compare growing a startup to running a race, then the pick of 1998's networking newcomers represent just about every type of contender.
None of these US startups is running a victory lap around a successful initial public stock offering.
But, in a sense, seven of the companies have crossed the finish line -- they've been acquired. Of the remainder, only one is running strong on its own, while two are still warming up.
Still warming up
If nothing else, NextPoint Networks was in the right place at the right time. Its message of 'business-oriented' network management was just what users wanted to hear. One year later, just about every network management vendor is trying to tie application and network management to business objectives, including more established players such as Concord Communications and International Network Systems. "Others have followed our lead, and that's great because it means we're on the right track," said William Maro, president and CEO of NextPoint.
In 1998, NextPoint attracted 100 customers and doubled employee count to 60. It also beefed up its management team, received $US12 million in funding and released v1.2 of its S3 performance and service-level management software.
In the year ahead, NextPoint will expand its application monitoring capabilities and try to ensure it doesn't get run over by all the other companies that are rushing down the track it helped pave.
-- Jeff Caruso
Sitara Networks said its SpeedServer product gives end users an express path through Internet congestion: think Roto-Rooter for the Web. The software works by streamlining the connection between your Web site and a client.
But Sitara found it difficult to penetrate the enterprise because of SpeedServer's initial $US75,000 entry price and the fact that the product uses a tweaked, proprietary version of TCP/IP. The company was forced to lower SpeedServer's starting price to $US14,995 and change its target market. Now Sitara is more narrowly focused on financial services companies. So far, it has racked up Putnam Investments and a leading investment bank, which the company won't name, as customers.
Early last year, Sitara garnered $US5 million in its third round of financing, bringing its total to $US17.5 million. In March, Intel bought an equity stake in Sitara and took a seat on its board of directors.
-- Robin Schreier Hohman
Leading the pack
This should be another good year for ArrowPoint Communications.
In February, the company shipped its second product: the CS-800, a chassis-based server load balancer that's part of its Content Smart Switch line. Industry analysts expect the server load-balancing market to surge, and ArrowPoint is positioned to become a key player. The company has the right idea: enable the network to make intelligent decisions about routing TCP/IP traffic.
Last year, ArrowPoint went through a third round of funding, bringing the total to $US33 million. President and CEO Cheng Wu expects to see $US20 million to $US30 million in revenue for fiscal 1999, the company's first full year of shipping the product. Cheng also hopes to bring the com-pany public in early 2000.
-- Robin Schreier Hohman
Over the finish line
Founded three years ago, AbirNet created a buzz with its SessionWall-3 network monitoring tool, which reports on network statistics and scans traffic for suspicious hacker activity. SessionWall-3 became one of the earliest commercial products for intrusion detection.
Israel-based AbirNet last year logged $US5 million in sales, but in May it was scooped up for $US27.5 million by Memco, another security vendor in Israel. In March, Platinum Technology bought Memco for roughly $US200 million. That meant SessionWall Enterprise, set to ship later this year, should have been carrying the Platinum brand name. The AbirNet name is history, said Marty Leamy, Platinum's senior vice president of systems management. And now the name is buried even deeper with Computer Associates acquiring Platinum. -- Ellen Messmer Aptex SoftwareWho said you can't go home again? Three years after leaving the nest of HNC Software, which had an 80 per cent stake, Aptex Software finds itself back under the old parental wing. HNC re-acquired Aptex earlier this year after the fledgling software maker registered its ninth consecutive profitable quarter on the strength of its SelectResponse and SelectCast products, which help companies manage e-mail, Web forms and phone calls.
Managing partnerships headed the company's 1998 agenda. Aptex signed agreements fusing its neural network and content analysis techniques with complementary technologies from companies such as Acuity, Aspect, eGain, Genesys/Adante and Mustang.
The company also landed big contracts with E*Trade, Ameritrade, Netscape and Geocities.
Aptex will continue to operate as an independent business unit, and HNC intends to fold Aptex technology into its own offerings.
-- Paul McNamara
One of Bright Tiger's shining moments in 1998 was when Allaire decided to integrate the startup's clustering technology into its popular Cold Fusion Web site development tool.
Little did it know that deal marked the beginning of something much bigger. Earlier this year, Allaire announced that it was acquiring Bright Tiger for 300,000 shares of common stock, or around $US17 million. In addition, it's assuming $US3 million of Bright Tiger's debt.
Bright Tiger has done well with its ClusterCATS Web resource manager software. In addition to forging the Allaire agreement, last year the company closed sales and marketing deals with some of the most aggressive players in server load balancing. Partners include Alteon, ArrowPoint, F5 Labs and RadWare/RND Networks.
This Tiger is roaring now.
-- Robin Schreier Hohman
NetSpeed burst out of the digital subscriber line (DSL) starting gate in 1997 with a full menu of hardware to support dedicated broadband services over regular phone lines. The new company had a complete package: customer modems, service provider access multiplexers and corporate-site routers to terminate multiple DSL sessions.
NetSpeed even had a few innovations, such as a "digital off-hook" feature that lets carriers drop a DSL connection when no traffic is travelling over it, allowing carriers to get by with fewer DSL modems in switching offices.
Cisco was so impressed that it snapped up NetSpeed in March 1998 for $US265 million.
Using NetSpeed technology, Cisco is developing customer premises and carrier gear to support higher densities of DSL lines. -- Tim Greene Switched Network TechnologiesSwitched Network Technologies' president and CEO Lance Smith said last year that 1998 would be a make-or-break year.
The company's only products were for LAN-based ATM, centred on ATM to the desktop, a difficult market in this era of high-powered Ethernet.
SNT broke. It broke into little pieces that have been swept under the carpet. Telecommunications vendor Tellabs quietly bought SNT for an undisclosed amount in September 1998, then discontinued its product line and dissolved the company.
Tellabs said it wanted SNT's ATM expertise for WAN products. But now the former company isn't even mentioned on Tellabs' Web site.
Asked about what happened to SNT, a tight-lipped company spokesman would only say that SNT found Tellabs' offer attractive and wanted to be part of a company with greater resources. -- Jeff Caruso Torrent Networking Technologies In the course of last year, Torrent Networking Technologies shifted its focus from enterprise users to ISPs. The rationale: with the advent of virtual private networks and the trend towards outsourcing, enterprise users no longer faced as great a need as ISPs to replace their backbone Cisco 7500s.
Torrent's pitch got it business with 25 service providers and, more importantly, captured the attention of Swedish telecomms giant Ericsson.
The vendor in March announced that it had acquired the startup for $US450 million in cash. Torrent employees became part of Ericsson Datacom group.
Ericsson said it needed Torrent's carrier-class IP gigabit router, which can forward tens of millions of packets per second, to aggregate and deliver quality-of-service IP traffic.
The router also rounds out Ericsson's Multi-protocol Label Switching solution for IP over ATM. The vendor said it can now deliver end-to-end IP and ATM networks.
-- Jim Duffy
Apparently we weren't the only ones keeping our eyes on YAGO Systems last year. In March 1998, Cabletron gobbled up YAGO in a jaw-dropping $US213 million stock swap. That was quite a haul for a relative latecomer to the wire-speed router market, whose technology was promising but not yet shipping.
That's changed, too. YAGO's Layer 4 switching technology is now Cabletron's SmartSwitch router.
The acquisition was a natural progression for the startup -- Cabletron already had a 25 per cent stake.
Hence, YAGO was swallowed whole and intact: all three founders and virtually the entire original staff of 43 employees remain with Cabletron.